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Ashton Kucher in Twitter war with Village Voice. Oh, and the NBA is in a coma

And so it begins. The NBA announced today it would lock out the players beginning at midnight tonight. That means no practices, no Summer League, no trades or free agent signings, and no team doctors helping Toney Douglas heal his broken shoulder.

We could be here a while. Luckily, KnickerBlogger has all sorts of swell stuff planned. Think of it as surviving a temporary power outage. Only instead of ghost stories and Dinty Moore beef stew, we’ll have Report Cards and… other stuff. In the mean time, use this thread to share your thoughts on the current labor strife, as we ponder these and many other questions:

How long will the lockout drag on? Will we see a shortened season a’la ’98-’99?

If players and owners come to an agreement, what will / should it look like?

Depending on what agreement is reached, what moves should the Bockers make heading into next season?

I originally wanted no part of this lockout talk becuz the idea of a bunch of rich and wealthy guys arguing about money reeks of insanity and Layden/Thomas cap management type idiocy. But I get it. Everybody should want 2 maximize their return in any way possible. But cmon(in my Stephen A voice)!! This is the NBA..not the NFL. The salary structure is as close 2 perfect as u can get, unlike the NFL who gives rookies like Stafford more money on his 1st deal than Brady was makin at the time. Now I know that the impasse is not all about salary. I’m just makin a point to how well the current system works with salary scales that make sense for the most part. I do think a hard cap is somewhat necessary if only 2 promote smarter cap management. I would keep the bird rule and do away with the other exceptions that allows teams 2 go over the cap. I also think free agents and teams should be able 2 negotiate whatever salary they like, provided that they don’t go over the blotted “max” as defined by the current salary scale. For instance..if teams wanna go the big 3 route, they should be able to negotiate that salary wise so that they may add more pieces and become more of a team. In my scenario, Miami’s 3 would sign for 3 years/30 mil with the 3rd year a player option, all in the name of a championship or ships. The other way it would work is say a player like Michael Redd or Oden was on ur team. Once they dealt with injuries or their play fell off to where they are no longer thought of as building blocks, but as important pieces around your true building blocks, then u should he able to re-sign him without adhering to the scale. As far as guaranteed money, u should only guarantee what u think the player is worth over the life of the deal. Or negotiate that players worth not necessarily based on stats into the deal. This is not the NFL where every play is potentially a play that woo severely limit u for the rest of ur life or even kill u. Those guys don’t need…

By the way, I in no way mean to sound like I’m PRO-owner in this debate. I’m jus tryina be reasonable on both sides. Honestly I think both sides are a little greedy..I mean damn- that IS one big pie to split. Still not as sickening as the NFL’s woes however.

I do think injured players should not count against cap in extreme cases… I know the injured exception exists, but if a player misses 100 games through two seasons because he’s not physically fit to play, you can’t say management did a poor decision in signing him to a long term deal… And I’m not saying the player shouldn’t receive his salary, just that the contract shouldn’t count against cap… Imagine what we could have done without Eddy Curry´s deal or Cuttino Mobley´s…

One thing I find interesting about the situation is while the owners and players are having their dispute, the owners are also having a dispute within themselves. Television revenue is a huge part of paying the cost of running a team and it’s highly unequal. They need to institute some kind of revenue sharing especially for TV contracts. The Knicks TV contract wouldn’t be worth nearly as much money if they didn’t have anyone to play against.
I think, ultimately, the players are going to give up a chunk of change and are really just trying to be careful that they don’t absolutely let themselves get railed. As a whole, the owners are losing some money but with the state of the economy, some is not really that bad. Shave the players’ BRI share by a couple points or remove some revenue from the BRI calculation, weaken player contracts some way or another, and figure out how the owners are going to share amongst themselves to keep the weakest teams solvent (or drop the bottom couple teams).

CRJoe: I do think injured players should not count against cap in extreme cases… I know the injured exception exists, but if a player misses 100 games through two seasons because he’s not physically fit to play, you can’t say management did a poor decision in signing him to a long term deal… And I’m not saying the player shouldn’t receive his salary, just that the contract shouldn’t count against cap… Imagine what we could have done without Eddy Curry´s deal or Cuttino Mobley´s…

Grymm: They need to institute some kind of revenue sharing especially for TV contracts. The Knicks TV contract wouldn’t be worth nearly as much money if they didn’t have anyone to play against.

I don’t really agree with this. They could contract teams. On the other hand, teams could move… and that’s probably an org like the Knicks’ biggest incentive to share their revenue. If teams started going under people might well move them to big markets like NY, LA, Chicago that could probably support another team. At that point you’d probably end up sharing your revenue with that team anyway as they ate into your market share.

The problem to me is that no one has any clue what the owners are or aren’t making. They don’t share their financials. They might be making money and they might not be. They might have a “loss” that’s really just an accounting loss. Having been granted legal monopoly status by the people and in many cases public money out of our pockets for arenas… I think they should be legally obliged to open their books. The NBA, to me, is not a private enterprise. It’s a sham of a business. All these major sports leagues are.

My solution, which will never happen, is more of a system like in Europe. This is one area where Europe is much more market oriented than the US. There is a degree of competition in that the bottom x teams from the first division fall to the second division after every season and the top x teams from the second division rise to the top division after every season. Mark Cuban has written about–and anyone can really see the opportunity, he’s just a successful entrepreneur and team owner so that’s why I cite him–buying a lower division European team, investing some money in better players, and rising up to the top division… increasing the value of the organization markedly as you go. (Cuban can’t own another basketball team according to NBA rules I guess, but I don’t see why he doesn’t do it with soccer… where there’s a lot more money to be made in Europe anyway.)

KnicksFanInVA:
Just a thought, if the entire season gets canceled, what would happen in the 2012 draft? How would the order be determined? Or would there even be a draft?

Very interesting question. Maybe they could do an equally-weighted lottery for all teams to pick the order. Or, since they are trying to help the smaller market teams, use a system that grants draft rights based on market size, with the big market teams picking at the bottom.

Unfortunately (or fortunately?) this is not a problem for the Knicks as we don’t have any draft picks in 2012.

CRJoe:
I do think injured players should not count against cap in extreme cases… I know the injured exception exists, but if a player misses 100 games through two seasons because he’s not physically fit to play, you can’t say management did a poor decision in signing him to a long term deal… And I’m not saying the player shouldn’t receive his salary, just that the contract shouldn’t count against cap… Imagine what we could have done without Eddy Curry´s deal or Cuttino Mobley´s…

I think this would have only encouraged teams to add more salary to their detriment (the current problem). Without those deals on the cap, we sign more players while still paying Eddy Curry and Cuttino Mobley’s contract. Now, it may not be a problem financially for Dolan to do this, but imagine Minnesota or Charlotte or New Orleans trying to do this. That would be akin to financial suicide.

The relegation idea is definitely intriguing, but I’m just not sure it would work in the NBA, or any other league for that matter. The only sport I could see it working even somewhat seamlessly is in baseball, where you have a tiered minor league system much more akin to what you see with European soccer. But where would we send the Clippers, Nets, and Bobcats? The D-League? Maybe in 10 or 15 years, if the NBA really puts more of a stake into it, relegation might be possible. But like you, I don’t see it happening. Plus — and correct me if I’m wrong — there are no salary caps in European soccer, which is yet another reason why I think relegation would only work with baseball.

As for the owners opening their books, I totally agree. The Coon piece I linked to above proves that the owners aren’t exactly being forthright in their painting themselves as victims. Yes, some teams are losing money. But, as has been pointed out ad nauseum, no one is putting a gun to Mikhail Prokhorov’s head and telling him he has to give Travis Outlaw $7 million a year. Additionally, a lot of these losses are little more than clever accounting tricks they have to use to cover losses sustained in sales, moves, and things of that nature. I’m not an accountant, so I can’t speak to how bad off the owners really are. But 13 years ago, Stern wasn’t talking about “guaranteed profits”; he was talking about the owners having a better idea of costs over the long term.

Regarding guaranteed contracts: this is a tough one. On the one hand, I understand the player’s perspective in trying to lock down financial security. Maybe there’s a middle ground to be had here, in the form of a more robust pension system. Not sure what that system looks like right now, but if we’re talking about the long-term health of the league, maybe forging a better pension system would appease both the players and the owners, who at the end of the day both want long-term financial security.

Can unsigned rookies play in the D-League while the lockout is in place?

When we acquired the team and sent Houston out to run it, I thought maybe the D-League would be part of the new CBA. But if we can send unsigned rookies and even our unsigned free agents out to Erie during the lockout, there is nothing stopping the the Knicks from throwing New York level resources at the Erie while they’re there. Maybe that’s why we got a D-League franchise.

Ted Nelson: I don’t really agree with this. They could contract teams. On the other hand, teams could move… and that’s probably an org like the Knicks’ biggest incentive to share their revenue. If teams started going under people might well move them to big markets like NY, LA, Chicago that could probably support another team. At that point you’d probably end up sharing your revenue with that team anyway as they ate into your market share.

It’ll never happen. For a team to move to a city they need the city to co-operate. There’s no way that New York will have 3-5 more teams. And the Knicks/Nets aren’t going to share their arena or help out the Bucks, Hornets, or Bobcats. So that isn’t a factor that will motivate New York or LA to share their profits.

The league isn’t going to want to contract either. Even though the least profitable NBA teams lose money, it benefits the majority of owners in expanding their market as wide as possible. If nothing more than to keep up their Finals ratings, Kobe, LeBron, Rondo, and Stat jersey sales, etc.

If the league wanted to be more solvent as a whole, they’ll share revenue better. Of course that may not be the goal of many of the owners…

Mike Kurylo: If the league wanted to be more solvent as a whole, they’ll share revenue better. Of course that may not be the goal of many of the owners…

This is the rub. Stop me if I’m being over simplistic (or a socialist), but I think pro sports owners tend to operate under the narrow impression that their “product” is their team. And therefore every other team is a competing product. In fact, it’s the league itself that’s the product — hence the term franchise owner. If we’re going to get the NBA to a healthier financial place, owners have to understand that a rising tide really does lift all boats. If the smaller teams can have more revenue with which to attract more stars and be more competitive, that’s better for the league. If the New Yorks, L.A.s and Chicagos of the world are going to be lucrative no matter what, how does it not help the NBA’s cause — and your bottom line — to assure the league is as competive as possible? That means more merchandise sales, bigger television contracts, better ad revenue — all of it.

We need better revenue sharing, particularly, as mentioned above, with regards to television. Want to assure you don’t end up with a bunch of Kansas City Royals and Pittsburgh Pirates “leeching” off the bigger market teams? Institute a salary minimum, pegged to a team’s revenue and the amount their receiving from shared sources. If the owners are forced to spend a certain amount of money, maybe they’ll have more incentive to go after the better players.

“Every year, taxpayers hand the plutocrats who own sports franchises a fat pile of money for no other reason than that one of those plutocrats, many years ago, convinced the IRS that his franchise is basically a herd of cattle. Fort calls it ‘special-interest legislation.’ ‘It’s not illegal,’ he says. ‘It’s just weird.'”

For the Radical Reconstructionists out there, is there a merit based system that could work in the NBA? Maybe something like this:

1) Every player on the roster makes a base salary of $150,000 per month.

2) A performance metric is collectively bargained (something similar to the Win Score), and players are paid, per-game, based on that metric.

3) An out-of-pocket ceiling is set (say $60 million), at which point teams are re-compensated by the league. (This discourages tanking to save money).

I guess it works something like the “purse” in golf and tennis, but on a team level. The advantage to a system like this is that there is still the same size “piece of pie” for the players, but it is rewarded to the players that are best at their jobs, and rewards fans by (theoretically) ensuring the best product is on the court.

The drawback is that the threat of injury looms very large (some kind of intricate worker’s comp system would have to be in place). Another drawback is that it would require a fair amount of revenue sharing to work.

Could a system like this work in the NBA? If it could would it be an improvement on the current system? Since there’s nothing else to talk about in Knickland, I thought I’d throw it out there.

Definitely intriguing, but it also has a lot of potential pitfalls. We’ve all seen guys playing in a contract year try and pad the stats. But all the while, they don’t really know what they’re going to end up being offered. All they know is that, in theory at least, the more numbers they put up, the more they get paid. But you start pegging salaries to specific metrics? I think that’s a disaster waiting to happen. I guess it depends on what stats we’re looking at.

Mike Kurylo: It’ll never happen. For a team to move to a city they need the city to co-operate. There’s no way that New York will have 3-5 more teams.

My idea is more that the incentive to share revenue is partially either that you do it on your terms or you do it on their terms… If there were no revenue sharing at all and certain teams are not financially viable, what are they going to do? I see four options: 1. go under (either organized or random contraction), 2. restructure your business to succeed in that market (no guarantee of success), 3. move, or 4. get money from other teams to stay put (revenue sharing).

I’m not talking about 3-5 new teams in NY. I’m talking about maybe one more. If this new team takes an equal share of both the Knicks and Nets fans (1/3 each)… the Knicks may have just shared 1/3 of their revenue involuntarily… that’s an estimate and of course if could be more or less. If you can share a smaller portion of your revenue voluntarily to eliminate the risk of having your revenue stolen (protect your monopoly) you have an incentive to do it.

Mike Kurylo: And the Knicks/Nets aren’t going to share their arena or help out the Bucks, Hornets, or Bobcats.

You don’t think there are capitalists anywhere in CT, LI, NJ… that want to build an arena? The Nets are leaving Newark and already left Medowlands… so there are two arenas right there.

Mike Kurylo: If the league wanted to be more solvent as a whole, they’ll share revenue better.

That’s my point. Part of the reason the Knicks will share revenue, though, is so other teams don’t compete in their own market.

… can move as they please. The leagues “vote” as to whether to let them move, but I understand that’s for show and if they chose to the owner can move regardless. Politically it might kill them with other owners, but they can do it.

Jim Cavan: The relegation idea is definitely intriguing, but I’m just not sure it would work in the NBA, or any other league for that matter.

I find it fascinating. I don’t think it will be done, but I certainly think it could work… if the courts/people stepped up and called out sports monopolists for their “un-American” activity.

This country prides itself on its entrepreneurial spirit. My idea is that the lower levels would grow organically. There’s room for 3 teams in greater NY or LA, 2 teams in Chicago or Boston, etc. It’s possible to run a profitable B-league team, but the real incentive for investment is getting up to the A-league and raking in the doe. The revenue stream is obvious, so I think if a veteran NBA team GM/President partnered with a businessperson and went to investors… they could raise the capital to start a team. Now fans have more choice as far as who they support. The market would reward the strongest competitors and punish the weakest.

The draft is really where it gets tricky. Especially in basketball where if a B-level team was promoted and handed the #1 pick when a Tim Duncan were coming out… they’ve just been granted A-level status for as long as they can hold onto Duncan. If this problem could be solved, though, (and I think it could) throwing seasons for draft position would at least no longer be an option.

There’s no salary cap in Europe, but I don’t see why that means there couldn’t be one. It would have to be a US system, but just borrowing the competitive model from Europe.

Z: Could a system like this work in the NBA? If it could would it be an improvement on the current system?

I think it’s a really interesting idea… but as Jim points out it could directly incentive guys to pad certain stats. Agreeing on which stats to reward in the first place would be very difficult, though I suppose if you did it right it would incorporate efficiency and such so that ball-hogging would be minimized. Defensive specialists who don’t get a lot of RSBs might get screwed, but I guess they already do in a lot of cases. If you let Berri design the system, for example, rebounds would be worth 10000x more than anything else, just as an example of how the system could easily get skewed.

In terms of the “out of pocket purse”… it would vary with win total, no?

I don’t even understand why there’s mentioning of three teams in one city Ted. I get what you’re trying to say, but you’re making the assumption that fans would actually support a strong B-League team. We’ve had a B-League team (more D-League) for 10 years. You think any of us would actually jump ship to the Nets? You are right about the monopoly, but the monopoly also works in reverse. I don’t give a crap about the Mets, Giants, Islanders or Rangers. I never will. If the Royals moved here and miraculously spent $300 million on payroll, I’d still love the Yanks. This is where I failed to follow your tier system with multiple teams in one market.

The Nets are moving to Brooklyn, they won’t even reach close to taking 1/2 of the Knicks fans.

Coon article is very interesting. From what I gather, the owners basically want to create separate entities of products and the players believe the NBA itself is the product and that they are employees of one company. And these two conflicting principles are what is holding up the talks.

So NBA players believe they should be given a piece of the NBA BRI pie, which makes sense. This is what was collectively bargained.

NBA teams believe each team should be able to make its own profit, exclusive of revenue sharing. Yet, each team needs to have the same ability or “chips” to be able to compete.

In other words, if both sides maintain their stances, I’ll see you all in 2012?

adrenaline98: I don’t even understand why there’s mentioning of three teams in one city Ted.

For 2 reasons.

1. Because hypothetically if there were no revenue sharing and teams could not survive in smaller markets… one of their most attractive options would be to move to a bigger city. There are two baseball teams in Chicago, why not two basketball? Three hockey teams in NY, why not three basketball? Heck, there are three first division basketball teams in Madrid, Spain… why not NYC? I have seen studies saying that NYC area could easily support three teams in any of the major pro sports. Why would fans support them? Why do they support any team? And the Nets and Knicks have both been laughing stocks for various reasons for a long time, the Knicks are horribly run by Dolan… why wouldn’t some fans support a third team? If it’s a LI or NJ team… there’s your fan base. If they play in Queens… your fanbase is there and LI. You can take a small fraction of the fan in metro NY and still have more fans than you would in a small market.

B. The B-league aspect is 100% hypothetical. I have specifically said I don’t think it will ever happen, why would you represent my as saying anything different?
If it happened, though… not all fans are like you and I spending countless hours on a Knicks’ blog. Most are far more casual. Same reason minor league baseball teams work in the NY area a B-league basketball team could work. Could be closer to home and cheaper. (And I was under the impression the Nets were a minor league team anyway…) Same reason Nets will steal Knicks fans in Brooklyn.

Ted, these are things that have been phased in over decades. The Mets have been around since the 60s. The proposition of supporting 3 basketball teams in NY would take a helluva long time before the second team (Nets) and the third team to garner enough fan base support.

I agree with you statistically that it is POSSIBLE, but I contend that it is highly improbable for a team in the red to move to a city like NY or Los Angeles, where costs are prohibitively higher, and actually garner enough attention and/or fanbase that exceeds where they are currently.

The Nets are the exception based on the population densities of NJ, where Philly borders the south and NYC the north. That’s the only reason they even have a chance to transition to Brooklyn.

Ted Nelson: You don’t think there are capitalists anywhere in CT, LI, NJ… that want to build an arena? The Nets are leaving Newark and already left Medowlands… so there are two arenas right there.

I’m not talking about 3-5 new teams in NY. I’m talking about maybe one more. If this new team takes an equal share of both the Knicks and Nets fans (1/3 each)… the Knicks may have just shared 1/3 of their revenue involuntarily… that’s an estimate and of course if could be more or less. If you can share a smaller portion of your revenue voluntarily to eliminate the risk of having your revenue stolen (protect your monopoly) you have an incentive to do it.

I don’t think NJ, CT, or LI are as big markets, especially with the Knicks (and Nets) capturing most of the local market. There’s a reason the Nets moved to Brooklyn. I don’t think being a third wheel in New Jersey is more palatable than other locations.

1/3 is an extremely high estimate of what they would draw there. No one in New York thinks of the city/state being split between the Knicks/Nets. In fact most people openly state that so many people root for the Knicks when they suck because it is the ONLY viable team for New Yorkers to root for.

The Knicks have no incentive to give other teams money because they might move into their ‘hood, much like Time Warner has no incentive to give me a discount because I make home movies with my camcorder.

adrenaline98: NBA teams believe each team should be able to make its own profit, exclusive of revenue sharing.

I don’t think the owners believe this so much as they’re pretending to as a bargaining ploy. If they believed the league wasn’t the product, there wouldn’t be revenue sharing.

Jim Cavan: think pro sports owners tend to operate under the narrow impression that their “product” is their team.

As I say above, I think this is a negotiation tactic. They’ve aggressively marketed the NBA brand for years. I think the owners are more aware than anybody that the NBA is more so the product/all their boats rise as the NBA does (especially Sterling…), though they do still have to compete with one another and with other entertainment options within their own markets. It’s a cartel really.

NBA is pretty equitable, especially since one star can make your team. I don’t think there’s a risk of Royals developing except through incompetence like the Clippers. The Hornets might need revenue sharing… but those guys couldn’t run a franchise in Charlotte either. I don’t know if revenue sharing helps teams like the Knicks as much as you suggest. Of course I really have no idea, but the Knicks have stunk for years and still probably make more money than a lot of teams who were actually good. Their boat has been helped by others and their market already. I can really see an argument either way for them… and I don’t know which is correct.

Ted Nelson: There’s no salary cap in Europe, but I don’t see why that means there couldn’t be one. It would have to be a US system, but just borrowing the competitive model from Europe.

Even with the capitalistic mindset Americans have, we don’t like our sports to be one-sided. At least theoretically we don’t. I think most Americans prefer the NFL’s system to MLB’s. The NBA is already prone to dynasticism, given how one truly great player could make a team a multi-year winner. Moving to an open cap would just make it worse.

Big problem with the European model is that the teams with more money are the teams with the titles… It hasn’t happened in basketball so much, as it has in soccer though… If you look at the top european soccer leagues, out of 20 teams there are only 2-3 teams that actually compete for the championship, but unlike the american model, these are the same teams every year…

If the NBA were to adopt such model, Cuban, the Lakers, Celtics, Nets & Knicks could create teams of 5 stars each that they could keep rebuilding over and over without ever hitting the lottery… And the small market teams could not compete with the salaries and benefits of those big teams…

So what would be the incentive for the Pacers or the Bobcats??? I don’t think the american audience would support a “strong” loser team… Also the cost of a small market NBA team is much higher than a small european club… How could you convince an investor to spend say 80 millions of dollars every year to get the Raptors to be a strong small team, and get a few mill in profit every year??? Everybody would much rather invest in the larger market winning teams….

adrenaline98: Ted, these are things that have been phased in over decades. The Mets have been around since the 60s. The proposition of supporting 3 basketball teams in NY would take a helluva long time before the second team (Nets) and the third team to garner enough fan base support.

Additionally the Mets had a ready-made fan base with the Giants/Dodgers. You have to go back to the early days of baseball when fans of the three teams hated each other. There were a lot of baseball loving fans that would never root for the Yankees.

In theory New York could support 3 teams, or more. But you wouldn’t instantly get 1/3 of the fans by just arriving. The Nets have played just about everywhere, but I would wager that at least half of NJ are Knick fans, and probably no more than 5% of LI (their former home). It might take a few decades (or more) to convert people over to the New Jersey Bucks. But they’d be no better off in the short term, and they’d need to seriously out-perform the other 2 teams to win over that new generation of fans.

adrenaline98: The proposition of supporting 3 basketball teams in NY would take a helluva long time before the second team (Nets) and the third team to garner enough fan base support.

I’ve seen studies from economists that disagree with you. I have no idea, but I speculate it could happen. The New York metro area has 19 million people. Oklahoma City’s metro area has got 1 million. Memphis’ 1.3. Milwaukee has got 1.5 million. Indianapolis, Orlando, and Portland’s have got 2 million each. Minneapolis’ has got 3 million. The city of Sacramento has got 1/2 a million. So as I’ve said you only need a small fraction of NY area fans to have as many fans as a small market team.

adrenaline98: but I contend that it is highly improbable for a team in the red to move to a city like NY

Again, there are two arena’s in NJ that would love to have an NBA team. Newark would probably give huge tax breaks to an NBA team.

adrenaline98: The Nets are the exception based on the population densities of NJ, where Philly borders the south and NYC the north. That’s the only reason they even have a chance to transition to Brooklyn.

The Nets played literally like 3 miles from Manhattan for decades… What does Philly have to do with them? They’re a NY team for all intents and purposes.

Mike Kurylo: Even with the capitalistic mindset Americans have, we don’t like our sports to be one-sided.

Again, I never, ever said anything about an open cap. The quote you used literally said the exact opposite. It said borrow the competitiveness of the European system and do not take every detail of that system. Why would you quote that then imply I am saying the opposite?

CRJoe: Big problem with the European model is that the teams with more money are the teams with the titles…

Again… I have said a bunch of times that you can take one aspect of the system without adopting the entire system.

CRJoe: I don’t think the american audience would support a “strong” loser team…

Huh? I have no idea what you’re talking about.

CRJoe: How could you convince an investor to spend say 80 millions of dollars every year to get the Raptors to be a strong small team, and get a few mill in profit every year??? Everybody would much rather invest in the larger market winning teams….

Huh? Someone already owns the Raptors (a cable company I think). They already invest in the Raptors every season. There are more people who want to own sports teams and have the money to own sports team than there are monopolies handed out by the leagues. In a competitive system some people lose their shirt… that’s the point: creative destruction.

Mike Kurylo: In theory New York could support 3 teams, or more. But you wouldn’t instantly get 1/3 of the fans by just arriving.

How many businesses instantly turn a profit? It usually takes years. People still invest in start-ups and even established businesses that they know will lose money for a given period because the long-term potential is there. The idea of competition is not to make survival easy… it’s to make it hard.

Ted Nelson: CRJoe: I don’t think the american audience would support a “strong” loser team…

Huh? I have no idea what you’re talking about.

You said there is a degree of competition among the bottom teams to not drop out of the main league into a B league… Who would support such a team??? Specially if, as you suggest, there are a couple of teams per city… I don’t think you could attract a large fan-base in America with the premise of “we don’t suck THAT much”…

Ted Nelson: Huh? Someone already owns the Raptors (a cable company I think). They already invest in the Raptors every season. There are more people who want to own sports teams and have the money to own sports team than there are monopolies handed out by the leagues.

Yeah but teams like the Raptors can make a ton of money by having a player like Chris Bosh and getting to the play-offs every once in a while… You suggest that the incentive would be to slowly build a team up, making a small initial investment in a lower tier team, and eventually developing into a top flight organization… But I just don’t see why would someone make such a long term investment, when they could use a lot less resources in a more profitable investment like an already established, big market, top tier team…

Ted Nelson: How many businesses instantly turn a profit? It usually takes years. People still invest in start-ups and even established businesses that they know will lose money for a given period because the long-term potential is there. The idea of competition is not to make survival easy… it’s to make it hard.

Sport teams won’t survive if they have to wait a whole generation to get the number of fans that will make them profitable. No one is going to invest a quarter to a half billion dollars then hope to get profit in (the soonest) a decade. And if that team fails (sucks like the Knicks did in the 00s) then that money is all gone. The Milwaukee Bucks can claim a decent share of Wiconsin, but the New Jersey Bucks might not have more fans than that.

Consider a mall with 3 movie theatres. The first has everything first class, been there forever. That’s the one most people will go to. The second one has some gimmicks (better sound/quality or smaller more cozier feel) that will appeal to some, a minority. The third one is in the ass-end of the mall and is dirty. Even though there are enough people in the town to keep three running, that third one is going out of business. Take that same dirty theatre & stick it in Wisconsin and you have yourself a safe little profit.

I don’t find this analogy at all accurate. You’ve built a strawman… stacked it in your favor. I didn’t say come in and try to be in the ass-end of the mall.

Mike Kurylo: Take that same dirty theatre & stick it in Wisconsin and you have yourself a safe little profit.

This whole problem arises because NBA team in small markets claim that they are not making a profit.

It’s a bad analogy, though. The Spurs are in a small market and FAR, FAR, FAR better run than the Knicks. Same with OKC. They are not the dirty theatres. As much as I’m a Knicks’ fan, Dolan is the slum lord with the dirty theatre.

CRJoe: You said there is a degree of competition among the bottom teams to not drop out of the main league into a B league… Who would support such a team??? Specially if, as you suggest, there are a couple of teams per city… I don’t think you could attract a large fan-base in America with the premise of “we don’t suck THAT much”…

There are already a couple of team in NY and LA… The point is that those bottom teams can change every year. Any team could be the team eliminated next year. You don’t know if that’s going to be your team you support. You support a team and hope they do well… or you change your allegences. Again, that’s what a market is all about. If I make Crap Cola and that’s the only Cola in your town… you’ve got to buy it to drink cola. In a free market you don’t buy Crap Cola cause there’s Coke and Pepsi and RC and… There are winners and losers, but generally the better run businesses win and worse lose.

CRJoe: when they could use a lot less resources in a more profitable investment like an already established, big market, top tier team…

Why do people invest in start-ups instead of only investing in well-established companies? There’s a theory in finance that risk and reward are proportional in a competitive market. Since everyone wants to invest in the big company… the reward is low. They raise money easily. Since fewer people want to invest in the smaller company… the reward is higher. This is finance 101 that you’ll learn in any intro class.

Ted Nelson: I don’t find this analogy at all accurate. You’ve built a strawman… stacked it in your favor. I didn’t say come in and try to be in the ass-end of the mall.

Premier Spot in the mall : ass end of the mall
::
Manhattan : New Jersey

And I’m being generous.

Ted Nelson: It’s a bad analogy, though. The Spurs are in a small market and FAR, FAR, FAR better run than the Knicks. Same with OKC. They are not the dirty theatres. As much as I’m a Knicks’ fan, Dolan is the slum lord with the dirty theatre.

Yes, but I think we can agree that the Spurs and the Thunder are the exceptions, not the norm.

Look, the Bobcats, Bucks, or Hornets are not going to move to New Jersey and instantly capture a third of the market. Look at that link from Larry Coon. The Nets lost ~ $10M a year in 2005 & 2006. They were still a pretty good team, the 2002 & 03 Finals appearances still fresh in people’s minds, winning teams that would a playoff series.

For the HornBuckCats to win a decent share of the market, they’ll have to be a very good team for a very long time. Their presence alone won’t cut it. How long would the HornBuckCats have to be good for Knick and Net fans to switch wardrobes? What about Bull fans or Maverick fans? You’d need to get kids that don’t have any loyalty already, and a small % of fans that are willing to move + that team would have to be killing it on the court. That sounds like a VERY risky business proposition. Heck if I had the choice, to be the 3rd team in the NYC area (in NewJersey) I’d rather take my chances in Seattle, which is 1/6 the market size.

Ted Nelson: Why do people invest in start-ups instead of only investing in well-established companies?

Yeah but you don’t invest in a start up to go and compete with google do you??? All small investments are aimed at capturing a specific share of a market that can be conquered, you don’t like Coca-Cola because X??? Well here is my product that offers you Y… No one is going to try and take over Coca-Cola’s market with a small initial investment, that’s finance 102…

But that wouldn’t be possible in this scenario… What would the smaller new teams have to offer to the market??? The defining characteristics for successful teams are either being a winner (like San Antonio, and the less successful but still perennial playoffs teams like Utah), or being a long standing, traditional, big established fan base team (Celtics,lakers, knicks etc.)… Neither of those features can be offered by smaller teams, so how would they attract their share of the market???

Ted, if you take the business statistics/studies out of the equation and just look around and ask people around you, you will realize that being a sports fan 99% of the time don’t make a lot of sense. In other words, I firmly believe CP3 is coming to NY, or that we’re certainly getting a Dwight Howard. If I ever took a step back from loving the Knicks like I do, I’d realize the probabilities certainly aren’t in my favor. That being said, I highly doubt those business studies are accurate. I may have threatened to become a Nets fan, but I never could stomach it. I watch the Giants, but I am a die hard Jets fan at heart, even though they and the Knicks haven’t won shit in decades. I don’t switch teams when times are down. Idealistically, it makes sense to. Who seriously wants decades long of suffering?

That being said, you can almost immediately rule out a huge majority of the NY population that simply don’t enjoy sports. They don’t watch and they never will, even if Prokhorov does a half time icecapades for my girlfriend, she won’t watch beyond more than that. So what you’re working with, realistically, are Nets and Knicks fans. You really think if the NYC Supersonics show up, some of us would say “This has been the day I’ve been waiting for”??

NY is known for its die-hard Knicks fans. Unlike other NY teams, we’ve had to live with no championships for decades. Even LA has 2 teams. I’d like to see statistics and studies that can quantify the human emotion of going to the grave with our shitty team. I’d like to see them quantify me throwing out the words “The Knicks are going all the way this season” which I will inevitably tell my friends when/if the season starts. :)

Doug: Ted even the small teams in Britain have histories going back decades. Good luck trying to create a relegation environment with new teams that no one has any attachment to.

This is true, but again I didn’t say to carbon copy the system. And I don’t think it will ever happen because US sports are a cartel. However, if the cartel were busted… sure I think competition would thrive.

Let’s just focus on the A-League and B-League of my construct. Besides the teams vying for market share in the major markets… you’ve got a lot of markets that support other major sports teams and are probably just as large as some current NBA markets that have got no NBA team. Take Pittsburgh, Cincinnati, Tampa, Baltimore, KC, Seattle, St. Louis, San Diego, Buffalo, Nashville, Jacksonville, San Jose… Las Vegas could too. I would think some of those markets could support a straight-up NBA team under the current system. Converting, say, St. Louis fans who are maybe Bulls fans now to a St’ Louis home team might not be that hard, especially since SL is a baseball town where they hate the Cubs.

With those 13 cities plus my 2nd teams in Chicago and the Bay Area (2 MLB teams, 2 NFL teams) and 3rd in NY, LA/OC… I’m at 17 teams for a second division. Other larger cities include Austin, TX; Columbus, OH; El Paso, TX; Louisville, KY; Alburquerque, NM; Fresno, CA; Omaha, NE… I don’t know about metro areas, but some of those cities are way higher on the population rankings than current NBA cities.

This could allow the NBA to attract new bball fans who didn’t care since their region had no team. I don’t think it would be that hard to get an existing big NBA fan with no team within hundreds of miles to support a hometown team.

First of all, there’s maybe a 1% chance contraction happens at all. So assuming we’re going to keep all 30 teams, the question then becomes where they should be. I have to agree with Mike that even the small market teams can support their franchises. Do they have a tougher go of it? Sure. But that’s precisely why we need more revenue sharing. Now before we put on our Jimmy Dolan hats and start fuming about handing out welfare checks to the Milwaukees and Sacramentos of the world, hear me out:

On top of more shared television revenue, what about setting up a system whereby the league sets a median ticket price X, based on the aggregate of the averages of what the teams actually charge (so you get an average ticket price for MSG, an average ticket price for The Prude, etc. etc., add it all together, and come up with an aggregate mean). The owners can still charge what they want, but with this caveat: a certain percentage (say half) over and above the league average X is shared with the other teams. So if the league average is $100 a ticket, and the MSG charges $200, $50 of every ticket would be shared. If your average is below the league average, you obviously don’t have to pay into it.

Dolan could still make money off of higher ticket prices, just less than he did before. Or, even better, he might lower them slightly (though it would still be higher than just about everywhere else). Likewise, poorer teams, knowing they had a little extra revenue coming in, could get away with lowering ticket prices somewhat, thereby drawing more fans and therefore even more revenue. Obviously it’s all about teams finding their own sweet spot, as it were.

That’s just one idea. And it probably isn’t a good one. The point is there have to be creative ways to induce revenue sharing that don’t simply involving “skimming off” the aggregate profits of certain teams, and that may even incentivize saner ticket prices for the richer markets.

Mike Kurylo: Of Madrid’s 3 football clubs, Rayo Vallecano is the young one, being founded in 1924.

Again, Mike… why so small minded about having to carbon copy Europe’s system? See my comment to Doug above.

Mike Kurylo: Look, the Bobcats, Bucks, or Hornets are not going to move to New Jersey and instantly capture a third of the market.

I used 1/3 because it was an even % of the fans… as I’ve said a couple of times now it only takes a bit more than 5% of the NY area to have the same population as many current NBA markets. And as I say to Doug there are lots of markets just as large as some NBA markets that haven’t got a team.

Mike Kurylo: Their presence alone won’t cut it. How long would the HornBuckCats have to be good for Knick and Net fans to switch wardrobes?

You aren’t going after their diehard fans. You’re going after the corporate sponsors to sell suites 1st and foremost. I’m not in the sports business, but I’m sure someone who is would chomp at the bit to compete with laughable franchises like the Knicks (who I love… but Dolan is a class A moron… saying this from personal experience, not Knicks) and the Nets.

Again 5-10%… that’s all of the NY market share you need to compete with many current NBA markets.

Mike Kurylo: Heck if I had the choice, to be the 3rd team in the NYC area (in NewJersey) I’d rather take my chances in Seattle, which is 1/6 the market size.

That’s you. Others would disagree. Different investors have different preferences.

Ted Nelson: You aren’t going after their diehard fans. You’re going after the corporate sponsors to sell suites 1st and foremost. I’m not in the sports business, but I’m sure someone who is would chomp at the bit to compete with laughable franchises like the Knicks (who I love… but Dolan is a class A moron… saying this from personal experience, not Knicks) and the Nets.

Again 5-10%… that’s all of the NY market share you need to compete with many current NBA markets.

New York is the largest market with 18M. Charlotte is 33rd with 1.8M. So if you’re aiming for 5-10% of the New York market, then at best you’ll end up with what you already have with Charlotte.

Ted Nelson: Mike Kurylo: Heck if I had the choice, to be the 3rd team in the NYC area (in NewJersey) I’d rather take my chances in Seattle, which is 1/6 the market size.

That’s you. Others would disagree. Different investors have different preferences.

Seattle is 15th with 3.4M. There are only 3 markets with sizes bigger than double Seattle. New York, Los Angeles, and Chicago. The first two already have 2 teams. The third is 9M. Even if you win 30% of that market (Bulls fans – good luck with that) you’re still behind where you could have for free. And it’s not like you’ll instantly get 30% of Bulls fans to come over. That will take years/decades. You’ll get that many fans in Seattle day 1.

Anyone know the breakdown in % of Nets/Knick fans in New York? I’d be real curious of that. Would be good to know how many fans you’d expect to get when moving to a city with an established team/fanbase.

CRJoe: Yeah but you don’t invest in a start up to go and compete with google do you???

Google itself was a start-up that people invested in to go out and compete with Microsoft, Yahoo and other well established companies, so that seems like an ironically awful example.

CRJoe: No one is going to try and take over Coca-Cola’s market with a small initial investment, that’s finance 102…

Where did you even come up with that? Clearly if you want to establish a team to compete against the LA Lakers it is not going to take a small investment. A large one. You really think that will all the money in LA, though, that someone couldn’t raise the capital to start a team that would take out the Clippers? Especially in a theoretical system (if we’re talking tiered system and not moving within NBA) where the Clippers might fall out of the league had they not drafted Blake Griffin?

CRJoe: What would the smaller new teams have to offer to the market???

A basketball team.

No one said the new teams had to be smaller. And what did the Clippers and Knicks offer the market before they got Griffin and Amare, respectively? Not much. If the new guys were smaller, they’d offer pro ball at a cheaper price. Just like minor league baseball.

Mike Kurylo: New York is the largest market with 18M. Charlotte is 33rd with 1.8M. So if you’re aiming for 5-10% of the New York market, then at best you’ll end up with what you already have with Charlotte.

Mike… why are you being so hard-headed here? You literally just repeated what I’ve been saying all along. What I said is that to replicate what you’ve already got in Charlotte or whatever… all you need is that 5-10%. If you get 15%… you may be doing twice as well as you were in your old market. Do you really not see that as a great opportunity?

Mike Kurylo: Seattle is 15th with 3.4M. There are only 3 markets with sizes bigger than double Seattle. New York, Los Angeles, and Chicago.

We were only talking about Seattle vs. New York. You are not understanding or apparently even reading my points. I specifically said I do not think there will be 3-5 new teams in NY. Just one. Maybe more, but I’m just talking about one. If we’re talking NBA… that one just has to get 16% of NY’s market to (I see 19 mill for NY… 18.9) match Seattle. At first you might fall short, but competing against James Dolan and the Nets… I’d like my chances.

Again, though, the point I’m making is that people’s opinions differ. In a competitive system, maybe you’d take a smaller market without a team and I’d take on the Knicks and Nets. Both of us might succeed, neither, one and not the other… that’s what a market is all about.

Mike Kurylo: Would be good to know how many fans you’d expect to get when moving to a city with an established team/fanbase.

adrenaline98: You mean 5-10% of the basketball fan base in NY, and that is drastically different than 5-10% of the NY market.

I am assuming that there are as many basketball fans per 1 million people across cities. I’m sure that’s not totally accurate, but unless you have some data to show NY has less basketball fans per capita than other areas I’ll stick with my assumption.

adrenaline98: Ted, if you take the business statistics/studies out of the equation and just look around and ask people around you, you will realize that being a sports fan 99% of the time don’t make a lot of sense.

Again… I am not going after lifelong die hard Knicks fans. I know they aren’t converting. In a POTUS election you go for moderate voters in swing states… Obama wasn’t trying to persuade KKK members to vote for him. You try to get support from the business community first since they buy the most tickets. Then you go after kids/families. I am not in the sports business, but it doesn’t take much creativity to develop a business plan.

adrenaline98: That being said, you can almost immediately rule out a huge majority of the NY population that simply don’t enjoy sports. They don’t watch and they never will

Same in any city. Why do a higher % of New York area residents not like sports than another area?

Ted Nelson: Google itself was a start-up that people invested in to go out and compete with Microsoft, Yahoo and other well established companies, so that seems like an ironically awful example.

Yeah google is a search engine, looking for space in the search engine market of the mid 90’s, with an initial investment of $25 million dollars, not exactly a start-up… Yahoo! had only been there for 2 years, as opposed to the youngest NBA team of Charlotte, which has 7 years… And Microsoft’s search engine (now knowned as Bing), came after google… Google it…

Ted Nelson: Where did you even come up with that? Clearly if you want to establish a team to compete against the LA Lakers it is not going to take a small investment.

Ok, so it’s like a said initially, if you want to get into your proposed top tier league, you would have to make an investment of a few hundred million dollars in a market like St. Louis or Las Vegas, offering a completely new, unbrandished product… Or else permanently remain in the lower league….

And everyone needs to remember that I am talking about theoretical situations. I am talking about either A. a situation where there is no revenue sharing. Where if small market owners are telling the truth they either have to move or parish… My contention is that big market teams pay off the small guys not just to have someone to play and reach fans in their market, but also so that they don’t move to their market. Or B. A situation that will never happen where the sports cartel is exposed as illegal either by the courts or us… the people. In that case competition would arise and other people would try to start teams. Some would surely fail, but some would thrive and push existing teams out of business or simply relegate them to less importance.

Google was not a start-up? $25 mill is a large initial investment? I couldn’t make this stuff up…

CRJoe: as opposed to the youngest NBA team of Charlotte, which has 7 years

Again… the NBA is a cartel. It is not a market. Membership to the cartel is restricted. The last time they decided to let a new member in was 7 years ago. That doesn’t mean if they decided to expand there wouldn’t be people chomping at the bit.

CRJoe: Ok, so it’s like a said initially, if you want to get into your proposed top tier league, you would have to make an investment of a few hundred million dollars in a market like St. Louis or Las Vegas, offering a completely new, unbrandished product… Or else permanently remain in the lower league….

You don’t have to do anything. You would certainly have to have the money up front to subsidize what would probably be an initial operating loss to lease a stadium, travel around the country, pay players, staff, etc. You could also be a scrappy small team with a great eye for talent and win the bottom league. Upon promotion $ would be easier to raise. New ACB teams often buy several new players upon winning promotion.

Making money isn’t easy, but it’s not impossible. I don’t know why you act like it’s so impossible.

Ted again, if you are talking about the basketball fan base, NYK fanbase is known as the most die-hard fanbase in all of basketball. That is whom you would be targeting. There is only 1 team in NY. If you’re a fan of the Bulls or Lakers living in NY, sure, you count as part of ‘the NY basketball fan base’. But if you’re diehard enough to pay for and follow a team you don’t even belong in the city of, I’d say that’d be harder to convert than standard Knicks fans.

Though I don’t have statistics to back it up, I would say it’s less likely to convert a NY basketball fan than to convert an LA basketball fan. And actually, being such an international city, I’d venture to say ‘per capita’ there would be less basketball fans in NYC than say Boston per capita. There is certainly a higher quantity of industries existing here than in a smaller market. NY also has multiple teams in other sports such as Hockey and Football. Many of those fans may not need the Knicks to root for as they have a sport or two to keep them occupied.

So if we were going by assumptions, I’d say NY has less basketball fans per capita and a more diehard fanbase than most other cities.

Do we have statistics like these to back it up? Probably not. It’s not as if the Knicks have ever had to do a study like this holding a monopoly here.

Jim Cavan: So no one likes my ticket revenue idea!?!?!? Leave it to a Philosophy major.

Intelligently commenting on the plan just requires an understanding of NBA finances that I don’t posses. I have no idea if the small markets are even losing money or just blowing smoke. Most likely they are using the current downturn as negotiating leverage and as soon the economy heats up they’ll be raping the players if they get their way in negotiations. I would need to know that before I knew whether more revenue sharing was even needed.

If small market teams could make more money (profit not revenue… but the marginal cost of another fan in what would otherwise be an empty seat can’t be too high) charging less per ticket, for example, they have every incentive in the world to be doing that already.

If it incentivizes lower ticket prices from teams that are already selling out… there’s going to be less revenue to share.

adrenaline98: Ted again, if you are talking about the basketball fan base, NYK fanbase is known as the most die-hard fanbase in all of basketball.

Why are there fewer basketball fans per capita in NY than elsewhere? If there are 19 mill in NY and 1 mill somewhere else, and in both cities there are 10% basketball fans… there are still 19x the bball fans in NY than that other city.

Teams target corporate ticket buyers to buy luxury suites and box seats and front row seats. Basketball teams don’t play every night, so first of all the NBA schedules things such that the Knicks and the new team don’t play on the same nights all the time. TV and corporate sponsors/ticket buyers… as I understand it that’s where the $ is at. You could build that market share if you’re half way decent at business.

adrenaline98: Though I don’t have statistics to back it up, I would say it’s less likely to convert a NY basketball fan than to convert an LA basketball fan.

Not that interested in your speculation…

You would definitely look into these things before investing hundreds of millions in a 3rd NYC franchise. I’m willing to bet that with 19 million people there is a market one could capture.

Ted Nelson: If it incentivizes lower ticket prices from teams that are already selling out… there’s going to be less revenue to share.

As compared to what though? As of right now, there’s no revenue sharing at all. If you’re assuming this idea is adopted, then there’s only going to be less revenue to share if the team that’s selling out isn’t going over and above the aggregate median price X. If Dolan still charges higher prices, there’s revenue being shared (and still profits being made, albeit somewhat smaller). That’s what I meant by a team finding its sweet spot; it could very well be the case that an Oklahoma City, which sells out often, could have ticket prices below the average. It might make financial sense for them to do it that way.

But you’re right: until we know what the real financial state of these teams are, all this is moot. I generally believe they’re crying wolf, though there may be a couple of teams hemorrhaging worse than the rest. But if that’s the case, then that means there only has to be marginal revenue sharing, no? The only other alternative at that point is keep the status quo (i.e. no revenue sharing and something resembling the current CBA) and contract the truly weak teams. Or something.

That inflation calculator has a 1998 investment of $25 mill at $33.27… but, yeah, it’s smaller than what I’m talking about, yes. NBA teams are worth hundreds of millions. The potential reward is there. I don’t know if we’re talking about my tiered system at this point, but in that case running a nice minor league team and making some money is a big landing step before losing your shirt.

If you track VC, though, $30 million is not some ridiculous raise. I work for a small biofuel company you’ve never heard of… and we’ve raised $20 million already in a couple of years. And ’98 was probably towards the height of the tech bubble anyway if I’m remembering correctly… raising money for unknown markets was all the rage.

Jim Cavan: I generally believe they’re crying wolf, though there may be a couple of teams hemorrhaging worse than the rest.

It makes a lot more sense to think that instead of losing money, they just aren’t getting a return of investment good enough to justify the hundreds of millions they have to pour in every year… But again, everything is speculation up to this point…

Jim Cavan: As compared to what though? As of right now, there’s no revenue sharing at all.

Where do luxury tax payments go? I really don’t know anything about the NBA’s finances… but if you skim off the top after the Knicks sold 10 tickets for $10 each you’ve got a bigger pot to split than if the Knicks sold 10 tickets for $9 each.

Jim Cavan: I generally believe they’re crying wolf, though there may be a couple of teams hemorrhaging worse than the rest.

I would guess they’ve been hurting a little the last few years with the recession… but are using that fact to try for a long-term deal that screws the players royally should the economy pick up.

If those teams are hurting, though, is it necessarily because their markets can’t support them or because they aren’t well run? Hard to say. I’m a fan of creative destruction.

Jim Cavan: The only other alternative at that point is keep the status quo (i.e. no revenue sharing and something resembling the current CBA) and contract the truly weak teams. Or something.

I don’t know if those teams are actually going to go under… but if they do the alternative is to move them to San Diego (8th largest city in US, 17th largest metro area)… to Seattle as Mike suggests (15th largest metro area… probably still have an arena I’d guess)… St Louis (18th)… Tampa (19th)… Baltimore (20th)… Pittsburgh (22nd)… or to Orange County/Inland Empire or Newark.

For someone not interested in other people’s speculation, you seem to be speculating a lot. Your whole idea and post is based on ill-conceived speculation with zero evidence yourself. If we’re debating, then debate for fun. You cite some study that says NY can support three teams, idealistically. Yea, if we split the basketball market into 1/3s, which you actually did above, you may have a case. That doesn’t mean it’s realistic at all. As I pointed out, if you actually believe you can develop a business model that can capture the hearts of Knicks fans in NY to convert, I think you’re blinded by your own greatness.

In regards to corporate suites and sponsors, even the Nets are targeting Brooklyn small businesses in their effort to sell suite packages. Could it be because most of the major corporations based out of NY that own Knicks suites are also Knicks fans? I’m kind of lost now as to where your plan lies right now, though it was refreshing to see you post an idea as opposed to critiquing only others.

CRJoe: It makes a lot more sense to think that instead of losing money, they just aren’t getting a return of investment good enough to justify the hundreds of millions they have to pour in every year… But again, everything is speculation up to this point…

What isn’t speculation is that the majority of the owners want to see a return on their investment. We know only of a few team owners that don’t care as much about that, and Dolan (whom is despised) isn’t one of them. At least he’s not Sterling. He’s only one part bad (stupidity) but he damn sure is willing to open his pockets to put a winning team on the floor, and that I have to give him credit for.

adrenaline98: Yea, if we split the basketball market into 1/3s, which you actually did above, you may have a case.

Let me break this down since it seems to be too complex.

There are 1 million people in City X. There are 19 million people in the greater NY area. Let’s say 20% of people in City X qualify as bball fans who will financially support the team through their $ and TV eyes. Only 10% of people in New York which you describe as a rabid bball city will.

We have 200,000 fans in City X and 1,900,000 fans in NY (not to mention all the tourists who come to NY compared to City X). There are 9.5 times as many fans in NY as City X… despite twice as many people in City X being fans on a per capita basis. You would need just over 10% of the NY fans to match the total number of fans in City X. If you got 11% of NY fans, you’d be doing better than you could have in City X. And remember that in this case fans might include a law firm or other business that wants box seats or a suite to entertain clients… but would rather pay less for your team than the Knicks. NY probably has a lot more big businesses even per capita than smaller markets (speculating there, though).

adrenaline98: In regards to corporate suites and sponsors, even the Nets are targeting Brooklyn small businesses in their effort to sell suite packages. Could it be because most of the major corporations based out of NY that own Knicks suites are also Knicks fans?

Could it be because those are potential ticket buyers for Nets tickets?

@69 Yeah but Dolan doesn’t have to worry about the Knicks losing money, this is such a established franchised that I’m willing to bet TV rights alone more than covers for all the year’s expenses… And then he still has merch, tkts and a ton of other ways to exploit his product… Knicks income and expenses are in the hundreds of millions at worse, paying 30-40 mill in salary and luxury tax isn’t relevant in his financial scheme…

CRJoe: I’m willing to bet TV rights alone more than covers for all the year’s expenses

He owns both the channel that televises the games (MSG) and the media through which the games are televised to millions of viewers (Cablevision)… he did zero work to get any of this… trust me Dolan doesn’t have to worry about anything at all and he makes that very apparent in his demeanor. I know a former Cablevision executive who was A. hired to work over the person whose job she was taking and B. told me about a meeting where Dolan turned to his right hand man and said “that’s the dumbest thing I’ve ever heard, don’t talk for the rest of the meeting.”

Before even going any further, what gives you any basis for speculating that you can even convert 10% of the current basketball fans in NY? Which examples do you have that show how easy it is to convert rabid sports fans?

You do realize that Prokhorov is moving to Brooklyn WITH a Nets fan base (albeit a small one) already, right?

It’s true that he inherited most of this stuff. But there are a lot of people out there more shrewd with their inheritance than Dolan is. He may be poor at managing his executives (or hiring them) but he sure is willing to pay for their mistakes. The whole trick has been to get the right executive to spend his money wisely. Clearly, since Checketts, the Knicks have made a lot of errors on their presidents of basketball operations.

adrenaline98: Before even going any further, what gives you any basis for speculating that you can even convert 10% of the current basketball fans in NY?

It’s a totally hypothetical example to illustrate how much ridiculously larger the NY market is. Do you not notice that I said there are twice as many basketball fans in City X than NY? Twice as many?

The Clippers moved to LA in 1984 and have had two winning seasons since. Their owner was sued by his long-time GM for being a racist. I’m not sure the Clippers have converted one single Lakers fan… the Lakers have won 8 titles since the Clippers for there… and somehow the Clippers still survive.

Neither one of us can prove here on this blog that it is or is not possible to start a 3rd team in NY and make it. What I am attempting to do is show you how likely it is. You might even say… well I see all that and I only say it’s 50% likely… fine. It’s still likely.

adrenaline98: You do realize that Prokhorov is moving to Brooklyn WITH a Nets fan base (albeit a small one) already, right?

He’s not even the guy who decided to move the team to Brooklyn. Ratner wanted to move them to Brooklyn as the capstone to a big development project. You know why? Brooklyn has got 2.5 million residents. It would be the 21st largest METROPOLITAN AREA in the US. If you broke up the 5 boroughs, Brooklyn would be the 3rd largest city in the entire US behind LA and Chicago. It might even help immediately over playing in the Meadowlands and hoboing in Newark… but it’s a long-term play.

Ted Nelson: Some of those guys invested decades ago and have already made a huge multiple on their investment. Some of them should run their businesses better if they’d like to get a better return from them.

Ted, here comes more speculation:
I would speculate that the NBA franchises crying the most about their profits are recent purveyors of teams such as:

Heisley
Shinn (no more)
Jordan (and previous owner)

And not the longstanding owners. In fact, who remains in the NBA as a longtime owner these days? Buss? Sterling (probably one of the few that cries about profits knowing him). Arison? Even the Heat are a young team and Riley rarely makes bad moves. Maybe Orlando? Another young franchise.

I am guessing well cap-managed teams that win such as the Spurs and to an extent the Rockets aren’t the ones hurting the most. Perhaps it is because of teams in markets such as Memphis that are hurting the most. It would make sense as it takes time to acclimate a team to a city, especially an expansion team that has no history and wins very little. If revenue sharing were implemented for local TV contracts, then it would help a lot I’d guess.

I can imagine them bridging a gap where the new owners received significant contributions towards their purchasing of a piece of a product, along with partially guaranteed contracts.

Yeah but my point is that even with the terrible Isaiah roster the Knicks probably made more money in ’08 than NOH or Orlando… The Knicks have a product that is going to be consumed no matter what, we will buy tix, and merch and watch the games, and frequent knicks blog, even if Malik Rose and Stevie Franchise are on the court…

Again Ted, I dispute your claim that even 50% chance of 10% of a fanbase of a team can be converted.

Look, if you told me they are moving to Seattle (despite having had the Sonics and currently has no team) I would say they have a better shot than to move to an established fan base, no matter how big it is. Seriously, would you become a fan of another basketball team in NY? EVER? Even if the Knicks sucked for 20 more years, you’d bail? I’d venture to say the fanbase becomes even more hardcore. We haven’t won squat in 40+ years. The Nets have always been just across the river. No one is infringing on the Knicks territory for a reason, not because little Jimmy is stopping them (at which point, you’d have to give him a little credit for doing so).

adrenaline98: Perhaps it is because of teams in markets such as Memphis

Memphis is the 41st largest metro area in the US, and it’s one of the most poverty stricken areas of the country (7th most poverty along cities over 250,000). Maybe someone took the time to look at a map and demographic trends to say Memphis is an attractive market for the NBA brand as a whole… but maybe Mr. FedEx or whoever owns them bought a toy without really thinking it through and needs to give that toy to a kid in a bigger market to play with it.

I have a hard time imagining a team couldn’t turn a profit in San Diego or Seattle. Those are much larger markets. Besides revenue sharing, the NBA could just let the weak teams move. Or if Memphis is such a strategically important spot for the NBA… sure, share your revenue with them.

CRJoe: The Knicks have a product that is going to be consumed no matter what,

As much as this is because they have a loyal fan base… it’s mostly because they play in the heart of the largest city and largest metro area in the country. The third largest metro-area (Chicago) has literally 1/2 as many residents as NY. I don’t think people are grasping that. Chicago still manages to have not one, but two “big market” MLB teams.

adrenaline98: Again Ted, I dispute your claim that even 50% chance of 10% of a fanbase of a team can be converted.

Again… I AM NOT CONVERTING KNICKS FANS. There are basketball fans in NY who don’t particularly care for the Knicks. There are companies that buy tickets that couldn’t care less about the Knicks… just a box to a Manhattan team… trust me, my girlfriend runs marketing for a large law firm that has tickets to every sport imaginable… she buys the tickets and could care less about any of the teams.

adrenaline98: Seriously, would you become a fan of another basketball team in NY? EVER?

If they were competently managed and won? Sure. I’m a Knicks’ fan, but I rooted for the Nets when they went to the Finals. I grew up in NJ and went to a few Nets games. You don’t have to be a diehard fan to spend some $ on a team. I am still a Knicks fan, but if I watch a Nets game I’m helping them. If I buy a hot dog there… helping them.

Again… look at the Clippers. They suck balls. LA metro is 2/3 the size of NY. It supports 2 teams, even though 1 sucks balls. Therefore… it seems reasonable NY could support 3.

Ted Nelson: Again… look at the Clippers. They suck balls. LA metro is 2/3 the size of NY. It supports 2 teams, even though 1 sucks balls. Therefore… it seems reasonable NY could support 3.

I’ll leave you guys with that thought… 12.8 mill in LA metro area and they’ve got 2 NBA teams… 18.9 mill in NY metro and they’re got 2 NBA teams. If the Clippers can survive in LA sucking balls (2 winnings seasons since moving to LA in 1984) while the Lakers have won 8 titles… I think I myself personally could run a NY NBA team that would compete with the Knicks and Nets and stay viable. Literally me. No extra training. Jump right in tomorrow. I think it is that easy to own and run an NBA franchise in NY… even a 3rd one.

I don’t think the disconnect is necessarily the time delay CR Joe. Ted Nelson, I have always loved your posts, but #85 is a bit out there. Maybe it’s just me, and please do not take this badly Ted Nelson, but your claims seem outlandish and grandiose. I have achieved many goals in my life, but I do not think running an NBA franchise would be easy–period. Perhaps the abstraction is one of the problems with blogging and cyberspace.

Ted Nelson: Mike… why are you being so hard-headed here? You literally just repeated what I’ve been saying all along. What I said is that to replicate what you’ve already got in Charlotte or whatever… all you need is that 5-10%. If you get 15%… you may be doing twice as well as you were in your old market. Do you really not see that as a great opportunity?

Why is it that I’m hard headed? Just because I disagree with you? Just because we differ on an opinion of something doesn’t mean that “I’m hard headed” nor that I am blind to a “great opportunity.” That’s, to say the least, insulting.

Really? Interesting that you said since inception, since they won 2 ABA championships in their first decade. Also, were you in a coma from 2002-2007? 5 of 6 seasons they went 2 rounds into the playoffs. 2 times they went to the Finals.

Ted Nelson: Again… I AM NOT CONVERTING KNICKS FANS. There are basketball fans in NY who don’t particularly care for the Knicks. There are companies that buy tickets that couldn’t care less about the Knicks… just a box to a Manhattan team… trust me, my girlfriend runs marketing for a large law firm that has tickets to every sport imaginable… she buys the tickets and could care less about any of the teams.

Here is the part you and I (and others) disagree on. You think you’ll automatically get 10% of the basketball watching/corporate buying fan base by automatically moving to New Jersey. I don’t see any logic backing that up. Corporations aren’t buying tickets in a vacuum. They’re doing it to impress their customers. No one is impressed by going to New Jersey, when the Knicks are right next door. It would be like bringing them to a Tad’s Steak house down the block from a Peter Luger’s steakhouse.

Second, basketball fans in the New York area have pretty much already set their allegiance. A portion of them are Knick fans. Others that reject the Knicks have already selected the Lakers, Bulls, Heat, Rockets, Mavs, etc. And allegiances are hard to change. Read Cialdini’s the Psychology of Persuation. Green Peace guys in the street only ask for your name & address to save the environment. Why? Getting you to commit a tiny bit means getting you to commit to the environment. That small commitment means you’re more likely to contribute more and more. In for a dime, in for a dollar. Take a shitty team (and yes you’d be moving a bad team, why would the Spurs resettle?) and stick it in the swamp, and no one will care. Certainly not 10%.

Ted Nelson: If this new team takes an equal share of both the Knicks and Nets fans (1/3 each)… the Knicks may have just shared 1/3 of their revenue involuntarily… that’s an estimate and of course if could be more or less. If you can share a smaller portion of your revenue voluntarily to eliminate the risk of having your revenue stolen (protect your monopoly) you have an incentive to do it.

Ted
Nelson: On the other hand, teams could move… and that’s probably an org like the Knicks’ biggest incentive to share their revenue. If teams started going under people might well move them to big markets like NY, LA, Chicago that could probably support another team. At that point you’d probably end up sharing your revenue with that team anyway as they ate into your market share.

Ted,

This all started because you said that small market teams can try to get big market teams to share their wealth by perhaps threatening to move into their neighborhood and steal their fan base. I can’t imagine any big market team being motivated by that at all.

Mike, I did not think this up. It’s one rationale for revenue sharing in pro sports. They don’t have to threaten, the threat is always there.

Alright Mike. Crappy teams like the Clippers and Nets have survived in large markets for decades, but I guess it’s impossible. LA supports 2 teams with 13 mill ppl, but NY could never, ever support 3 with 19 mill. Nets survived literally in NJ, but NJ could never support a team. Awesome. Newark has tons of law drums, but I guess they have no clients. Good point.

You keep building a strawman out of my argument. I never said show up in the NY area and get 10 percent automatically… Obviously you have to run your business competently.

Mike, you were being hardheaded by continually making a strawman of my argument to minimize the credibility of what I was saying. Literally blatantly saying that I had said the exact opposite of a quote you were literally referring to at one point. Hardheaded for seeming to dismiss my point without reading it, since you kept mid-paraphrasing it. Hard headed for thinking a business must be profitable immediately. For thinking every investor acts like you. For thinking LA can support 2 teams and Chicago two big payroll baseball teams, but the 20 mill NY market is inpenatrible for a new NBA team. And mostly for not being creative enough to imagine a well run team winning games and outcompeting the Knicks and Nets.

You continue to blatantly misrepresent points I make to belittle my argument and I’ve insulted you? Interesting.

My point with the Nets is that it’s hard to say they’ve been a well run business. Until recently the played in the Oakland Colliseum of NBA arenas: a big cinder block. They’ve still managed. My point is you don’t have to be the NJ Nets. You don’t have to play in NJ at all. Just a thought since Newark now has a stadium. Could just as easily play anywhere in greater NY.

Ted Nelson: Mike, I did not think this up. It’s one rationale for revenue sharing in pro sports. They don’t have to threaten, the threat is always there.

I don’t think the threat is there to move, as much as it’s there to not be competitive. If there aren’t 29 other teams to play against, the Lakers are worthless. If there are only 6 teams in the league, few will care for basketball and the market dwindles. Good by tv ratings, jersey sales, etc. That hurts the Lakers. So that’s why they would share their revenue. Not because the HornBuckCats are going to take a million Californians away.

Ted Nelson: Alright Mike. Crappy teams like the Clippers and Nets have survived in large markets for decades, but I guess it’s impossible. LA supports 2 teams with 13 mill ppl, but NY could never, ever support 3 with 19 mill. Nets survived literally in NJ, but NJ could never support a team. Awesome. Newark has tons of law drums, but I guess they have no clients. Good point.

I didn’t say it was impossible for a team to survive there. I said that they have a tougher hill to climb to get a decent share of the market. If anything the Nets & Clippers prove my point. The Nets have been in the New York area since their inception (30+ years now) and they had some recent success when the Knicks were awful. They are still considered a small market team. There is room for a another team in NY & LA, but there doesn’t seem to be much of an advantage in doing so. Especially when there is a decent sized market (or two) available.

Basically, Mike, if you think 13 Mill LA can support a team with 2 winning seasons playing in the same exact arena as a team that’s won 8 titles in that stretch, but 19 mill NY can’t support a third team based on nothing but your gut on how loyal knivks gas are… Great for you.

The hardheaded comes in that you want to keep pinning my argumet for something it isn’t even, and won’t bother to imagine what it would take for a team to make it. Just “nope could never happen.”

Dajudge, running a monopoly, or more oligopoly in this case, in a market with 20 mill people is not that hard. Creating one, sure. I promise you that if James Dolan can run the Knicks… So could you or I. Guy is a legit idiot. Class A moron. I say that from personal experience.look at what he’s done with the Knicks too though. He’s still bringing Isoah around. You or I could really so a better job’ I truly believe that. You just manage people, you don’t run everything yourself. Hire a President who doesn’t harass coworkers or pull the Curry deal… And you’ve got Jimmy beat.

But seriously now, I think we’re talking at cross purposes. Ted’s right to say New York could, in some universe — and possibly even this one — support a third team. Baseball did it for years. The question would be, is that the wisest thing for the league? I would argue not, if only because folding a Charlotte, New Orleans, or Sacramento and plopping another franchise down in Newark would send the message to the NBA lay-fan that the league really is about big market teams and big market money. It would be a bad PR move. You’d be alienating a huge part of the HornBuckCat fan base, in an area far bigger than the metropolitan area of the city itself.

Besides, I think we’d all agree that, if New Orleans or Sacto were to completely implode, Seattle would be at or near the top of the priority list. That, comparatively speaking, would be good PR.

I don’t even know what we’re debating now anymore. I don’t give a crap what Ted says. There is no way a third team, or ‘another’ team will move in on NY and take its fanbase. NY has 1 ORIGINAL team, 1 team from the beginning of the NBA, a part of one of the largest collections of basketball talent/fandom in the history of the sport. You are insane Ted if you believe you or any other NYK fan could become a true fan of any other team. There is a reason the Nets have sold 34 out of 104 possible suites. Even corporate sponsors are NYK fans, and you will be until the end. Consider how many hours you’ve spent on this board alone criticizing, analyzing, and speculating on possible, potential, and current moves the Knicks make.

If you told me Seattle could convert its fanbase towards a new team, I would believe you. NY has supported 3 baseball teams in a completely different era, with FAR different salaries, expectations, travel options, and exposure.

It would take multiples of the amount of time Clippers gained fans, or Mets gained fans, to make another basketball team in NY relevant. It certainly isn’t worth the effort, and despite this HUGE market, there is a reason why someone else has yet to move in on this territory.

As sorry of an owner that James Dolan is (in terms of mismanagement), no one has brought in an investor group to try and accomplish that which you deem to be so simple. You literally would have to be a completely arrogant and narcisstic individual to believe you can usurp the Knicks organization and swoon DIEHARD, HARDCORE, RABID Knicks fans to join your cause.

You make excellent points about many things, but this is not something that you can prove at all. What CAN happen and what WILL happen are two completely different things. The Knicks have enough of a bball fanbase to support 4 teams if they had to. It doesn’t mean Knicks fans will budge or choose a new team because the option is available.

And I don’t know if you’re just trying to get a rise out of me by bad mouthing NJ, but that point was out of touch with reality. Notice the sport you left out? NFL? Most revenue of any team sport? Where would you get corporate tickets to go see the Giants or Jets play? In NY? No. Why do the Devils do well? Why go to Queens or the Bronx for baseball? All signs point to the Nets lack of branding and marketing not to NJ being the problem. It’s a huge market in and of itself, northern NJ. Plenty of people and large businesses.

And all some of you guys seem to have a stereotypical view of New Yorkers thats not totally true. There are tens of thousands of young adults who move to NY every year without necessarily and ties to the Knicks. There are people who just want to catch a game but not pay Garden prices. There are people from out of town who’d go not to see Team 3, but their oponnent. There are people who’ll go or turn on their tv to see Kobe or Wade or whatever star on the opponent. If Team 3 had a star there are people who’d go to see him. There are gfs who just wantto take their bf to a game, or parents their kid. There are school groups and other orgs that go as a group.

I’ve said I don’t know much about NBA finances to know who is paying what portion of the bills… but to just say it’s impossible? If Dolan rehired Isaiah? If Ratner bought a different team and for them to Brooklyn? If Team 3 were a well run business and winning team?

I still don’t see how people can watch the Clippers survive in Lakersville with 6 mill ppl per team and not think three teams could make it in NY with 6 mill per team. Are you guaranteed to get 10 percent? No. But calling it impossible? Can’t be done? No way a great owner could do it?

I’ll give an example of it happening: Chelsea football. They existed, but a new owner gained them market share in a saturated market.

Adrenal gland, I’ll say it once more… Not all NY area residents who enjoy the game of basketball are rabid Knicks fans. You clearly are. That does not mean everyone else is. Step outside your little world.

I cannot prove it unless I do it (or someone else does) sure. You can no more prove it can’t be. My argument relies on demographic, logic, and real world examples… Yours? On some gut instinct that Knicks fans are uniquely loyal compared to any fans in the world. That they’re “different.” that every NY area resident who enjoys bball only enjoys the Knicks. Not only are you being a total homer… but I know tons of ppl in greater NY who like bball and are not rabid Knicks fans.

While I do think that it’s possible for the NYC metro area to support another team (though I think unless you’re willing to play in the Meadowlands or take on the massive long term debt involved in building your own stadium, it’d be tough as I don’t see Newark as a long-term option) I’m not sure it answers the larger question of what to do with struggling franchises. For instance, as I now live in Chicago- while Chicago could conceivably support another franchise there’s no way in a million years you’d get any support from the city- which is broke- to move another franchise here. The kind of concessions/tax breaks that owners routinely got to move to a new city have dried up and in this current tea party climate are unlikely to come back any time soon. I think the idea that struggling franchises can just up and move to greener pastures isn’t as viable as it once was.

I am going to say it… i think the NBA fans are a bunch of bandwagoners with some die hard fans thrown in.

If you opened a 3rd team in NY you would get instant fans from near your arena. Put some popular prices the 1st years, have some kind of attraction (a Deron Williams / a Blake Griffin) Not everybody is going to pay Dolan’s prices, and being a fan of a small team has some kind of self-satisfaction.

If your starting point of a 3rd team in NY is being like Charlotte Bobcats, with the possibility of drawing much more fans if you go into the playoffs or win something; i’d say some owner would take that risk. I am not really sure that possibility is better than starting a team in Seattle, but it is definitely better than having a team in Memphis.

For the sake of the league as a whole, it is better to have the teams widespread. Concentration in the big markets would result in a net loss of TV profits. And it is much more marketable a league with one team per city.

About relegation… i am not sure it would work in the USA, with so much bandwagoners and other major leagues, in the end, teams facing relegation draw less profits; and i am not sure that system works with a salary cap; if a team is relegated but has to pay its players more or less the same than playoff teams, then it goes straight into financial hell, with almost no income but a huge payroll.

I’m in the vast minority but I feel like this lockout will be wrapped up without games being missed. The thing that gives me the most optimism is that revenue sharing is so low, only at 25 percent. If it was at 75 percent as with the NFL, there wouldn’t be a lot of room to change the financial structure of the league. It would be a dire situation with revenue flexibility tapped out. Right now the owners are being absolutely ridiculous with their contention that they will address revenue sharing amongst themselves AFTER the players give back around 30 percent of their salaries over 10 years. Yeah, I’d really believe that if I was a player.

It was a good start anyway that the players proposed reducing their percentage of BRI from 57 to 54 percent. If the Larry Coon and deadspin articles are correct, that should come close to making up the yearly losses not including debt servicing and absurd roster depreciation. Then it should be up to the owners to increase revenue sharing to ensure greater profitability. Eventually they are going to have to make compromises on their end. Although perhaps I’m being too optimistic about the big market owners.

As is, revenue sharing is low, draft slotting is already in place, ratings are up and a new national TV deal will be negotiated in the not too distant future…I’m optimistic.

I hate to say it(sorry, Ted) but I essentially agree with Ted on several points. First, fan loyalty in NY for the Knicks is way lower now than it was in the past (I grew up in the 60’s/70’s and NY was 90+% loyal. The Knicks have been irrelevant for a decade, so the prospects of 1) Brooklyn’s team developing a fan base and 2) a franchise moving in from another city (Hornets, Kings) doing better here than they are in NO or Sacto is very feasable. However, those franchises would be very vulnerable to non-profitablilty (see the NY Islanders) or to being relocated once the grass seemed greener somewhere else (see the Dodgers and Giants.) There is no refuting, however, that NY could support 3 franchises in any sport. If it can do so in hockey, it can certainly do so in basketball.

Would it be best for the league? There is no question that when the Finals (or any marquis game/series) includes big market teams, the league makes more money and that is good for the league under a revenue-sharing situation. With the proliferation of cable and the pricing out of the general public via PCLs and corporate ownership of seats, I think the geographical considerations have changed, so what was true in the past might not be true going forward.

I wonder whether the issue with NBA basketball right now is the product itself. It is the only major sport where I hear over and over again from hard-core sports fans that they love basketball but only watch college basketball and find NBA basketball boring. Hardly anybody says that about football (the only comparable sport in terms of the popularity of the college game), baseball or hockey. It is hard for me to understand, because I watch very little NCAA basketball outside the tournament. Is it the length of the season? Meaninglessness of regular season? That the players have outgrown the court or the rules? The tendency towards dynasties? (Lakers, Bulls, Spurs and Pistons have won 16 out of last 20 championships.)

Guys, I initially did not believe Ted’s claims about the possibility of relocation or new franchising, but after reading up on some academic research on the subject, I am now more inclined to agree with him.

See for example: Kern and Alexander, “The economic determinants of professional sports franchise values.” Journal of Sports Economics, 2004, which is supposed to be one of the “first empirical studies of professional sport team values.” The full article is not readily available if you don’t have an academic account (you can search on Google Scholar if you want), so I’ll summarize it in this post.

Basically the authors use regressions to estimate what factors influenced MLB, NBA, NFL, and NHL franchise values (as estimated/reported by the “Financial World” magazine) in the 1990s. The variables they test are: per capita income, population, team success in the previous season, “regional identity” (naming a team the Tennessee Titans or NE Patriots instead of Boston Pats etc), new stadium (and all the govt subsidies, upgraded luxury box facilities etc that go along with it), relocation, name change, and newness of the team (after 8 years the variable disappears), and a dummy to control for individual year effects (you don’t really need to understand this part).

Anyways, the results are somewhat surprising. Due to lack of space I will only summarize the results that are of interest for our discussion: population has a significant effect for the MLB, NBA, and NHL but not for the NFL, which could be attributed to revenue sharing. Per capita income only has a significant effect for the MLB, and a small one at that.

And now the key idea: both relocation and being an expansion team DID NOT have a significant effect on franchise value. Note that in the 90s there were no expansion teams/relocations for NBA teams so that result is only for the MLB, NBA, and NHL.

To continue, the point is that while we may think that it is difficult for new teams or relocated teams to attract fans, the evidence suggests that these factors don’t actually matter much for PROFITABILITY per se, at least in the MLB, NHL, and NFL. Whereas for the NFL you can make the case that revenue sharing takes care of this problem, such is not the case for the MLB & NHL in the 1990s.

Anyways, if anyone has a better interpretation of the results or a objection to the study’s methodology, please enlighten me.

Instead of ranting as I have been, here are the points I question or disagree with and why. No particular order.

-Only rabid fans support teams- While I’m sure it’s huge to have devoted fans, getting 5-10-15% of revenue from basketball in a market is not the same as converting 5-10-15% of rabid fans or even fans. There are a lot of casual fans who aren’t strongly associated with one team. There are people who might not be big fans of your team, but will spend some $ on tickets, etc. In a huge market you are more likely to catch some of this slack both in tickets and tv viewers.

-The Nets are the perfect example- I don’t mean losing when I say laughing stock. They have no brand equity. I grew up a basketball fan in NJ, and I associate the Nets with 3 things: incompetence, their awful uniforms, and their awful old arena. Even though the Devils literally played in the same place and I am barely a hockey fan (a Rangers fan really), if I saw someone in a Devils’ jersey I’d see it more as a Jersey pride type of thing… In a Nets jersey I wouldn’t care. Take the Oakland As as a comparison. The Raiders have huge brand equity… but the As are horribly run and play in a craptastic park even with a good GM. No brand. Doesn’t mean the Bay Area can’t support 2 MLB teams, just that the As stink at business.
Clippers are even worse as their owner almost seems to try to fail.

-NYers are somehow uniquely loyal to the Knicks- This just reeks of homerism to me.

-Teams wouldn’t move to big markets- If they couldn’t survive in their own markets, you think orgs would rather just fold than attempt a move to a bigger market? No one would buy those franchises and attempt it? My point was not NY is the next market a team would move to. It’s that if teams in small markets started going under… trying to compete it the largest market would make sense.

Also, adrenaline98, one last point I question is Nets’ suite sales. What’s the price? The sales pitch? Could be environment, but it also could be bad business.

Mike Kurylo: If I’m building a strawman, it’s because there isn’t much of an…

You admit in the comment I quote here that it can be done, yet you keep arguing against my point that it can be done… This is why I say hard-headed. Originally you could have agreed it could be done, but qualified it. You just seemed to disagree fully instead.

Nicos- Maybe. That’s a short-term environment really, but Chicago is about to make a big investment in building a casino/casinos so it’s not like Rahm isn’t spending at all on large entertainment projects.

Z-man: It is the only major sport where I hear over and over again from hard-core sports fans that they love basketball but only watch college basketball and find NBA basketball boring.

I’ve thought about the same thing. Personally I’ve always assumed it’s the individual style of the NBA game. On a lot of teams the LeBron James or even Jamal Crawford dribbles around for 10 seconds and then drives to the basket only to draw a foul or just throws up a fade away J with two hands in his face. Guys like LeBron make it look good, but if you’re not LeBron you still try to imitate him. I am a big fan, and would still prefer to see more of a team oriented game. Less of a pick-up game approach.

I also think this speaks to the point that there are basketball fans who might not particularly care for the Knicks. They might not care for the NBA at all, but maybe if a well-run team were right in their backyard (region within NY area) they’d go occasionally or watch a few TV games during the season or take their child to a game or whatever. Not a…

citizen: See for example: Kern and Alexander, “The economic determinants of professional sports franchise values.”

Interesting stuff. I am just talking out of my butt with no real research or in-depth knowledge of sports economics… just saying it’s possible and if small market teams were going under one would probably attempt it or in my dream competitive tiered system it could happen… but I think it’s worth pointing out that if someone were to actually consider moving a franchise they’d probably do some research and hire some experts.

Thanks, citizen, for looking into it a little. I’ve seen a couple of studies about how NY could support a third MLB team, but haven’t really looked into it any deeper than that.

I guess the counter-point (off the top of my head) might be that those teams weren’t generally moving into already saturated markets (besides maybe Oakland moving back… though NFL may be different). People might point to the As and Nets not doing too well, but I don’t know that this means no team can make it. It’s also possible those are poorly run organizations. That’s certainly their reputations (on the business side). They may move to Brooklyn and San Jose to escape their “inferior” locations and 2nd class status, but other sports teams do better than they do in roughly the same geographical locations. Or look at the Hornets. They couldn’t make it in Charlotte despite the finance boom there, and now they can’t make it in NO. How much of that is those cities and how much is that the Hornets aren’t well run?

Ted Nelson: Or look at the Hornets. They couldn’t make it in Charlotte despite the finance boom there, and now they can’t make it in NO. How much of that is those cities and how much is that the Hornets aren’t well run?

Doesn’t this point contradict your point about teams moving to big markets??? You seem to be saying that if the Hornets were properly run they could be succeeding in NOH… But also what about the Grizzlies & the Sonics??? Why didn’t they take their product to a bigger market, closer to their sphere of influence??? And they are successful franchises… Memphis went through some economic hardships 3-4 years ago, but now they are booming, and OKC may have the highest return of investment in the NBA…

I guess my point is, if moving a third team to a big metro area is such a great idea, why hasn’t it happened already???

A. The NBA is a cartel. It’s not a free market. They collude to distribute teams in a certain way, even if market forces would distribute the teams differently. This is why there’s revenue sharing in the first place. Small market team tells big market team, hey it’s unfair you’re located in a big market and I’m in a small one… if I were in your market I’d be making more money too. What is directly implied there? That the big market is a more attractive location. People mention that the Knicks (etc.) subsidize small market teams to have someone to play. But do you really think these teams would just fold up and give up their franchise if there weren’t revenue sharing and they couldn’t make it? Or would they come to the attractive market to compete?

B. I did not say no smaller market than NY is attractive and every single NBA team should move to NY. Sure you can run a franchise in OKC and other small markets. If every team was fighting tooth and nail in NY… the obvious opportunity would be to move somewhere else (maybe something like the Giants and Dodgers thinking).
I’m saying that if you can’t make it in your smaller market… sure you can try Seattle or wherever. You could also try NY. In the cartel you will be discouraged from doing so. If a free market (not a controlled one with 30 teams) someone would try it. They may or may not succeed.

C. They left Charlotte with their owners having made pretty big fools of themselves and a couple of years later the NBA expanded back into the Charlotte market. My point is that the Hornets are known for incompetent ownership. Every team is different. The Nets may have had incompetent ownership for decades, and it seems pretty clear Sterling is not a perfect owner. Katrina cut NO’s population substantially, so I have no idea if it’s still a viable market. I was just using the Hornets more as an example in terms of leaving Charlotte

citizen – since you seem reasonable, my point it this (and it always has been): It’s not that a large market can’t have 3 (or more teams). It’s that a team like the Bucks/Bobcats/Hornets aren’t going to pressure the Knicks/Lakers/Bulls into revenue sharing by threatening to move into their neighborhood. Those teams don’t feel threatened by that because they won’t lose their fans or any revenue from it. At least not for a decade a more. And that will keep these teams from moving there. (That and league pressure to keep the market as wide as possible).

Mike Kurylo: It’s that a team like the Bucks/Bobcats/Hornets aren’t going to pressure the Knicks/Lakers/Bulls into revenue sharing by threatening to move into their neighborhood.

Again, Mike… this is part of the rationale for revenue sharing. I didn’t come up with this on my own.

You say revenue sharing is so that the big markets have someone to play. Please explain to me, Mike, what would happen without revenue sharing. The people who own these valuable NBA franchises that are not profitable would just give them up for free? Is that what would happen, or would someone say to themselves… “you know… Small Market X only has 1 million people and it’s not profitable, but NY has 19 million people… maybe I should try to move there and win just 10% of the market there over the next 5-10 years. That would double my revenue and make me far more profitable?” No one would start a rival league if those franchises hadn’t existed?

Why do these leagues want to spread their influence? Could it be because they don’t want to see parallel leagues popping up and competing with them? Could it be that if the NBA only had 10 teams, there would still be lots of basketball talent out there and lots of markets in which to put teams? Could besides for starting teams in those markets the 10 NBA teams didn’t cover, this new league also compete in and near NBA markets? Could this have actually happened historically? Could it be called… I don’t know… the ABA? The ABA was reportedly founded with the goal of eating market share from the NBA to the point of forcing a merger. It succeeded in its goal. Were there any ABA teams near NY? Maybe NJ?

Again, I don’t think it’s me who is being unreasonable here. You’re ignoring history and logic.

Ted Nelson: I’ve thought about the same thing. Personally I’ve always assumed it’s the individual style of the NBA game. On a lot of teams the LeBron James or even Jamal Crawford dribbles around for 10 seconds and then drives to the basket only to draw a foul or just throws up a fade away J with two hands in his face. Guys like LeBron make it look good, but if you’re not LeBron you still try to imitate him. I am a big fan, and would still prefer to see more of a team oriented game. Less of a pick-up game approach

I would like the NBA to consider the following changes:

1) widening the court (6 feet would do it, i.e. 3 feet per side.) This would allow for:
2) moving the 3-pt line back (24 feet would be my preference)
3) Something akin to a 5-second rule to promote ball movement
4) reinstatement of the “can’t throw it into the backcourt” rule from out-of-bounds at midcourt.

The 3-point shot is too prevalent, imo. It was originally more of a “specialist” shot, but today, teams (like ours) take 20-30 shots a game from there. If you bring the 3-pt conversion % down, teams might need to be more creative on offense, and defenses might have more ways to penalize uncreative basketball. The 3-pt shot was instituted in 1980, and until the early 1990’s it was a relatively low % shot (under 50% TS%) and less than 10 attempts a game; now teams take on the average of 18 attempts a game at a TS% of 54%. The mid-range game has suffered as a result.

I think these are all great ideas. Unfortunately, I don’t see any way they lengthen or widen the court. Extending the three point line, maybe. I’ve also long held we should incorporate the 5-second rule; I think it’s done only good for college basketball.

I just wonder what an extended 3pt line would do to the effectiveness of D’Antoni’s offense. You’d think that players and teams would regress at something resembling equal rates, but I really don’t know. Would be interesting to look into.

If you want to encourage player movement I think the best way would be to allow more physical defense on the ball but call the game much tighter off the ball. There’s just too much incentive to go one on one when almost any contact out high is going to draw a foul. And if you get rid of some of the grabbing/holding/bumping off of the ball, you’d really encourage player/ball movement. Personally, I like the 3 point line where it is- it keeps the floor spread without taking the guys behind the line out of the play- they’re still close enough in to make cuts to basket, hitting a cutter in the lane etc… viable. Move it back to where it becomes a really low % shot and you’re going to see the middle start to get clogged up again or even more guys just standing around on the perimeter completely uninvolved in the play than you have now.

Lots of rival leagues have failed as well. The XFL, AFL, USFL, WFL, WLAF, and shortly the UFL. Not all of these teams were able to share in that market, or be successful enough to force the parent league to merge with them. And forming another league is straying from the main point. (Unless you think the BuckHornCats will leave the NBA to form their own league?)

Again this whole back-and-forth is because I disagree with your statement @10 (bolding is mine):

Ted Nelson: I don’t really agree with this. They could contract teams. On the other hand, teams could move… and that’s probably an org like the Knicks’ biggest incentive to share their revenue. If teams started going under people might well move them to big markets like NY, LA, Chicago that could probably support another team. At that point you’d probably end up sharing your revenue with that team anyway as they ate into your market share.

It’s possible for the BuckHornCats to come to New York, Los Angeles, or Chicago and win 10% of the market or more in a decade or more. If you had the ability to wait it out 20-40 years with such a team, you could potentially gain a lot more than 10% and turn a a huge profit. I’m just saying it’s not probable. The upside to such an endeavor would be immense, but there is a considerable risk involved (with failure being an option) and of course it would take a long time.

That’s why I don’t think this is a motivating factor when it comes to revenue sharing. It might come from another way (and I have an idea about this for a post), but I don’t see teams threatening moving to NY, LA, CHI, or DAL as the impetus.

I really think that the league has got to do something about the guaranteed contracts. THAT IMO is the root factor that causes turmoil. Yes some of the owners have made many of their own problems by signing bad contracts to begin with. But the system works in the NFL. It would work in the NBA. Rolling back salaries only means that you revisit these same problems a few years from now after you have remade the same mistakes. Injury contracts coming off the cap should be a no brainer. I mean for the most part insurance pays those contracts anyway, so why not let it come off the books? There is no reason a team should be penalized for something it can’t control like that. And they don’t have to be fully unguaranteed. There can be a reasonable guaranteed period. Like maybe half the contract with a buyout clause arranged in the contract itself. The league wants to shorten contracts also and that is smart too. 3 years is a good max, it will allow a little more flexibility. 4 years is not awful either. Either one of those you guarantee 2 years of the contract and that way a team knows that in the worst case a bad contract will only set you back for no longer than 2 years. All teams benefit from that, not just big markets. Small market teams are much more likely to get stuck overpaying players. So the argument that it would allow strong teams too much of an edge is ridiculous. Either way I think it’s much more important than the salary cap or contract amounts are going to be. It’s a tough business and there are simply too many times that players have the leverage to force a team into a bad deal. Players show promise one year and then fall off the next all the time. There is no real system that you can use to make a wise decision when you deal with that many variables. So a system that allows correction of mistakes is needed. Hell you can always type without a mistake if you go slow enough. But they still put the delete button there…

I like your ideas, Spree, but doubt that the players union will go for 3 year max w/ 2 guaranteed. Maybe 4/3…

I would love to see the league contract. Perhaps some rule where a team that is unprofitable before revenue sharing for a certain period of time (3 years?) gets dropped from the league. Just doesn’t seem like the league can support 30 teams.

Z-man: You can’t really extend the 3-pt line in the corners w/o widening the court…

Oh yeah…. Good point.

And I agree with Z-man: 4 years max with 3 guaranteed might be something the players union goes for. As for contraction, I disagree. I think the league can support 30 teams. We’ve seen from some of these financial statements that a) teams aren’t losing as much money as they’re claiming, and b)fewer teams are losing money than they’re claiming. I think if we fix the contract issues and devise some kind of revenue sharing, even if it’s cosmetic, that will go a long way. And we have to remember that these organizations are quite large, with lots of employees. Better housekeeping on the owners’ front, trimming unnecessary fat and such, would go a long way as well. In a recession, everyone has to tighten their purse strings. If the players have to, the owners have to be willing to also, and not solely with regards to their players’ salaries.

The root cause of teams overpaying players is that the best players are worth way more than the max. Let’s say that Lebron was making $35 million a year. Miami would then have to forgo signing bosh or wade, freeing up another star, thus increasing the supply of available stars and reducing cost.

It’s a solution that would never happen, and in one way I don’t like — because if you do an excellent job drafting, you will lose out when rookie contracts expire. I think bird rights are really great because they reward wise drafting, and to a lesser extent wise free agent signing.

To make this fairer for smaller market teams and still maintain something similar to Bird Rights, what if all players had a choice to either be unrestricted or restricted free agents when their contracts expired. As UFAs, they would be restricted by max salary rules, but if they agreed to be RFAs, they could sign for any amount per year that a team offered. If the team they were with was a smaller market and chose to match, and if that deal put them over the cap, they would be compensated. Some significant percentage of that deal would be paid for by teams with bigger markets.

This would allow the NBA to eliminate the luxury tax entirely. The amount other teams contributed to these contracts would be directly proportional to the amount of money they earned. This would spread the financial pressure to keep contracts down to all teams; no longer would small markets have to pay more than they could afford to keep a team together. Of course, you’d have to put severe restrictions on who qualified. Maybe the player would have to have either started his career on the team or have played for them for 4 or more years. To prevent teams from using this cash for role players, the contract would have to be significantly larger than the player’s previous deal.

Has there been any studies that estimate a given player’s worth in terms of revenue generated? Ideally, a system would be devised that encouraged players getting paid what they deserved to get paid based on perfoemance, health, and age. It seems that shorter and eventually non-guaranteed contracts with reasonable buyouts balanced with reasonable player options might work towards accomplishing this.

Again, like I have said already, if it were economically viable, teams would have done this already. It takes a long time to build team equity, especially when talking about one of the original teams in the only recognized league in this country. If there were studies that showed Knicks fans can be persuaded to become another teams fan as easily as some of you proposed, it would have happened sooner. The one thing I’ll agree on with Ted is the 10% that it can sway would be larger than most small markets.

It’s one thing to sit here and say the Knicks suck, that you wish they can make this or that move, that you wish they can be someone elses team.

The logic behind some of these potential fans such as migration is absolutely ridiculous. You think if a basketball fan migrates to NY, they are looking for a new team? You think people who never gave a crap about sports that move here will ever care enough to truly support a team? Like I said, corporate sponsors are at 34/104 for the Nets. It sure doesn’t sound like an easy proposition.

Z-man:
On another note, Philly is looking to get rid of Speights, might he be an option for us at the 5?

FINALLY ANOTHER TOPIC!!!

He’s a pretty good rebounder, even when his minutes dipped last year he stayed consistant in the glass… Not a great defender, but very strong against back-to-the-basket players, much better suited than Amar’e to guard a 5… His assist numbers are really good for a center, if we could get a 3pt specialist on the second unit, to play some minutes alongside Chauncey, this could provide a different look on offense & not make us look too one dimensional on that end of the court…

One big worry though is that his blocks have dropped every year while his fouls have come up, is he getting sloppy on d as he gets older??? Is it disinterest???

He’s only 23, and I haven’t heard of any physical issues. Definitely seems to have an attitude, motor or B-ball IQ issue, though, kinda like AR. He does seems to have a big, strong body and a lot of ability, hard to understnd his lack of development.

Anyway, I don’t think Philly is just looking to dump him… I’ve heard they’re trying to move Iggy for a number of bigs (Odom, Kaman & Biedrins have been discussed)… Shumpert could handle the defensive hole left by Iggy **if** the Sixers would actually do that kind of deal, at the same time that would make Speights dead weight on their roster, so we would be in a position of privilege to command a few extra assets…

My point wasn’t that every rival league has succeeded, in fact my point was that leagues expanding helps to keep rival leagues at bay. Specificially because when the NBA was only 10 teams the ABA came in and made a good go of it.

It’s tough to discuss all this because it’s all theoretical. What would happen if revenue sharing had never existed? What would happen if leagues never expanded? What would happen if revenue sharing stopped today? What would happen if a 3rd team were located in NY? No one can answer any of these questions definititively.

Mike Kurylo: It’s possible for the BuckHornCats to come to New York, Los Angeles, or Chicago and win 10% of the market or more in a decade or more. If you had the ability to wait it out 20-40 years with such a team, you could potentially gain a lot more than 10% and turn a a huge profit. I’m just saying it’s not probable.

A. Where are you coming up with the 20-40 years? You haven’t explained it at all besides to say that New Yorkers all love the Knicks, so I take it you pulled it out of the sky. I am as uninterested in your guess of how loyal Knicks fans are and how improbable something is as I am in someone speculating on how awesome Allen Iverson was without stats. There are plenty of examples of teams turning around their fortunes in far shorter periods.

And again… you don’t have to convert fans to gain market share. Loyal fans definitely help and you would obviously try to gain them, but simply picking a good location in the NY area for an arena would get you traffic.

Mike Kurylo: That’s why I don’t think this is a motivating factor when it comes to revenue sharing.

Again, Mike… I didn’t make this up. It’s a big part of what revenue sharing is about once you have established franchises. At first you want to let new friends into your club to stop the kid across the street (the ABA) from having a cooler club. Once you’ve got new members… they have equal power. Especially once their membership has been sold to another owner. If they can’t make it in a small market, they are going to look at the NY market.

The mass is just overwhelming. 19 MILLION PEOPLE. It’s not just taking Knicks fans. You can grow the basketball market for ticket buyers by being more accessable to millions and millions of people than the Garden. You can get some TV viewers on nights the Knicks or Nets weren’t playing… TV rights for any NY area team are huge. If you build a winning team you’re getting playoff revenue. I don’t see why you insist it’s going to take 10 years to do all of this… and have now changed that to 20-40 years.

You still haven’t explained what you think would happen without revenue sharing. The unprofitable teams would fold? The barely profitable teams would accept their meger returns? 8 teams would move to Seattle?

adrenaline98: If there were studies that showed Knicks fans can be persuaded to become another teams fan as easily as some of you proposed,

You still don’t get my points at all. I have said 3000000 times it’s not about Knicks fans. Not everyone in NY is a Knicks fan. Most people in general are not diehard fans. Most people take their kid to a game for the experience. They turn on their TV to watch a good game. Think about the people you know. How many are diehard NBA fans who watch the draft and obsess about stuff like we do? We are not the norm.

Spree8nyk8: I really think that the league has got to do something about the guaranteed contracts. THAT IMO is the root factor that causes turmoil.

Unguaranteed contracts would be great for the league… the league being the owners. The reason there is a CBA in the first place is that the owners can’t unilaterally make decisions. The players can walk away and leave the owners with no assets. They can start their own league to compete with the NBA… and as much as I like the Knicks, I’d rather watch the best players regardless of what league they are in.
And the NBA isn’t the NFL…

CRJoe: Shumpert could handle the defensive hole left by Iggy **if** the Sixers would actually do that kind of deal

Philly had the pick right before the Knicks. It’s possible they loved Vujcic #1 and Shumpert #1a… but if they were really high on Shumpert why not just take him there?

For the record, I agree with Ted on this one. I think NYC/NJ could handle another team. I think San Jose or San Diego should have teams, maybe even another Texas team. I mean I feel for cities like New Orleans but it’s barely larger than Buffalo.
Clearly a billionaire has the right to buy a team and take it wherever he wants it, but I think the league should research if that policy is in it’s best interest.
As for revenue sharing, how is that fair to the teams operating in the larger markets?

Ted Nelson: Philly had the pick right before the Knicks. It’s possible they loved Vujcic #1 and Shumpert #1a… but if they were really high on Shumpert why not just take him there?

No one’s saying they were high on Shumpert… I’m just saying that if Iggy left Shumpert could be a good replacement on the defensive side of the floor… For all we know Philly is not even remotely interested in Shumpert..

I still think Speights can play if he’s got his head on straight, but I just question whether Philly is going to trade for a guy they just passed on #16 in the draft (which doesn’t necessarily mean they don’t like him better than Speights and any other offer for Speights… just makes it less likely they’re high on him)… or the Knicks are going to trade a guy they just glowed about taking #17 in the draft for a guy with serious motivational/attitude concerns who basically plays a position they claim to have purposefully stayed away from drafting.

CRJoe: For all we know Philly is not even remotely interested in Shumpert..

Dunno… Don’t like Shumpert, do like TD… Besides it’s on line with what Ted said, you don’t trade the one of the few guys who genuinely wants to play for us, for a guy with mental issues… I still remember Speights getting into a fight with Hansbrough in ’10’s summer league, because “Psycho T” was being too intense, he reeks of immaturity, and that’s a major concern on a project player(yes I watch, random summer league games of things I semi support, like the Pacers… What do you want from me??? I worked at home)…